Congress begins probe of alleged mortgage loan fraud of vets

The staff of the chairman of the House of Veterans' Affairs Committee recently began investigating allegations that some of the largest U.S. mortgage lenders charged illegal fees in home refinancing loans for hundreds of millions dollars to veterans and taxpayers. The charges against the lenders were brought up last month when a whistleblower uncovered new evidence in a federal court in Atlanta.

The Washington Post reported that under the VA program, veterans can refinance with home loans guaranteed by the government so they can take advantage of lower interest rates or shorten the terms of their mortgage. The lenders are not, however, allowed to charge attorney fees to veteran borrowers. Two mortgage brokers in Georgia claim major lenders told them to disguise attorney charges as part of the title examination fee when billing veteran lenders. This claim violates the False Claims Act.

U.S. Representative Bruce Braley, a Democrat from Iowa and member of the U.S. House Veterans' Affairs Committee, said he hopes the publicity surrounding the allegations will encourage veterans who have refinanced their homes through the Veterans Affairs programs to double check their paperwork to make sure they were not charged illegal fees. 

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